Best of the Week
Most Popular
1.Are UK Savings Interest Rates Finally Starting to Rise? Best Cash ISA 2017 - Nadeem_Walayat
2.Inflation Tsunami - Supermarkets, Retail Sector Crisis 2017, EU Suicide and Burning Stocks - Nadeem_Walayat
3.Big Moves in the World Stock Markets - Big Bases - Rambus_Chartology
4.The Next Financial Implosion Is Not Going To Be About The Banks! - Gordon_T_Long
5.Why EU BrExit Single Market Access Hard line is European Union Committing Suicide - Nadeem_Walayat
6.Trump Ramps Up US Military Debt Spending In Preparations for China War - Nadeem_Walayat
7.Watch What Happens When Silver Price Hits $26...  - MoneyMetals
8.Stock Market Fake Risk, Fake Return? Market Crash? - 2nd Mar 17 - Axel_Merk
9.Global Inflation Surges, Central Banks Losing Control and Triggered the Wage Price Spiral? - Nadeem_Walayat
10.Why Gold Will Boom In 2017 - James Burgess
Last 7 days
USD Gold Myriad of Signs - 28th Mar 17
Ominous Social Trends That Will Shape Our Future - 28th Mar 17
Foundation And Empire: Is Donald Trump The Mule? - 28th Mar 17
Top Ten US Dollar Risks - 27th Mar 17
The Popularity of Gambling and Investing Amongst Students - 27th Mar 17
Is Political Betting on the Rise? - 27th Mar 17
US Stock Market Consolidation Time - 27th Mar 17
Russia Crisis - Maps That Signal Growing Instability and Unrest - 27th Mar 17
Goldman Sachs Backing A Copper Boom In 2017 - 27th Mar 17
Foundation – Fall Of The American Galactic Empire - 27th Mar 17
Stock Market More Correction Ahead - 27th Mar 17
US Dollar Inflection Point - 27th Mar 17
Political Week Presurres US Stock Market - 25th Mar 17
London Terror Attack Red Herring, Real Issue is Age of Reason vs Religion - 25th Mar 17
Will Washington Risk WW3 to Block an Emerging EU-Russia Superstate - 25th Mar 17
Unaccountable Military Industrial Complex Is Destroying America and the Rest Of The World Too - 25th Mar 17
Silver Mining Stock Fundamentals - 24th Mar 17
A Walk Down the Dark Road of Bad Government - 24th Mar 17
Is Stock Market Flash Crash Postponed Until Monday? - 24th Mar 17
Stock Market Bubble and Gold - 24th Mar 17
Maps Of Past Empires That Can Tell Us About The Future - 24th Mar 17
SNP Independent Scotland's Destiny With Economic Catastrophe, the English Subsidy - IndyRef2 - 24th Mar 17
Stock Market VIX Cycles Set To Explode March/April 2017 – Part II - 23rd Mar 17
Is Now a Good Time to Invest in the US Housing Market? - 23rd Mar 17
The Stock Market Is a Present-Day Version of Pavlov’s Dog - 23rd Mar 17
US Budget - There’s Almost Nothing Left To Cut - 23rd Mar 17
Stock Market Upward Reversal Or Just Quick Rebound Before Another Leg Down? - 23rd Mar 17
Trends to Look Out For as a Modern-day Landlord - 23rd Mar 17
Here’s Why Interstate Health Insurance Won’t Fix Obamacare / Trumpcare - 23rd Mar 17
China’s Biggest Limitations Determine the Future of East Asia - 23rd Mar 17
This is About So Much More Than Trump and Brexit - 23rd Mar 17
Trump Stock Market Rally Over? 20% Bear Drop By Mid Summer? - 22nd Mar 17
Trump Added $3 Trillion in Wealth to Stock Market Participants - 22nd Mar 17
What's Next for the US Dollar, Gold and Stocks? - 22nd Mar 17
MSM Bond Market Full Nonsense Mode as ‘Trump Trades’ Unwind on Schedule - 22nd Mar 17
Peak Gold – Biggest Gold Story Not Being Reported - 22nd Mar 17
Return of Sovereign France, Europe’s Changing Landscape - 22nd Mar 17
Trump Stocks Bull Market Rolling Over? You Were Warned! - 22nd Mar 17
Stock Market Charts That Scream “This Is It” - Here’s What to Do - 22nd Mar 17
Raising the Minimum Wage Is a Jobs Killing Move - 22nd Mar 17
Potential Bottoming Patterns in Gold and Silver Precious Metals Stocks Complex... - 22nd Mar 17
UK Stagflation, Soaring Inflation CPI 2.3%, RPI 3.2%, Real 4.4% - 21st Mar 17
The Demise of the Gold and Silver Bull Run is Greatly Exaggerated - 21st Mar 17
USD Decline Continues, Pull SPX Down as well? - 21st Mar 17
Trump Watershed Budget - 21st Mar 17
How do Client Acquisition Offers Affect Businesses? - 21st Mar 17
Physical Metals Demand Plus Manipulation Suits Will Break Paper Market - 20th Mar 17
Stock Market Uncertainty Following Interest Rate Increase - Will Uptrend Continue? - 20th Mar 17
Precious Metals : Who’s in Charge ? - 20th Mar 17
Stock Market Correction Continues - 20th Mar 17
Why The Status Quo Is Under Increasing Attack By 'Populist People Power' - 20th Mar 17

Market Oracle FREE Newsletter

Elliott Wave Trading

Greek Debt Crisis Turns Deadly; Will Governments Act Before Economic Disaster Hits?

Economics / Global Debt Crisis May 07, 2010 - 08:11 AM GMT

By: Mike_Larson

Economics

Best Financial Markets Analysis ArticleThis week, the financial crisis in Greece turned deadly serious. No longer are investors just losing boatloads of money. People are starting to lose their lives!

The latest bout of chaos struck on Wednesday during a general strike. Everyone from air traffic controllers to teachers left their posts. Tens of thousands of protestors hit the streets, hurling rocks and Molotov cocktails. Three people reportedly died in a fire that struck an Athens bank branch.


So what’s provoking the madness?

It’s the stiff austerity measures the rest of the European Union and the International Monetary Fund want Greece to enact. Officials are forcing Greece to slash public sector wages, freeze pensions and boost taxes before they’ll start disbursing the $143 billion in bailout money.

Greece's citizens are scared over what's to come.
Greece’s citizens are scared over what’s to come.

But Greek citizens are sick of bearing the brunt of the pain. They don’t want to see their wages, salaries, and standard of living collapse. And they’re stark raving mad, especially because the measures are being crammed down their throats at a time when unemployment is already running at a six-year high of 11.3 percent.

Borrow and Spend Madness Sparks a Greek Tragedy

I hate to see things come to this. At the same time, I believe there is a serious (and potentially valuable) lesson coming out of this mess — one that I hope governments elsewhere will learn!

You see, this terrible Greek tragedy stems from a simple fact: The country lived way beyond its means for far too long! Politicians borrowed and spent like mad, assuming the day of reckoning would never come.

Then on September 24, 2009, creditors decided they’d had enough. I don’t know why it was that day. I don’t think anyone does now — and I doubt anyone ever will. But that’s when Greek debt prices started declining and Greek bond yields started rising.

That was when creditors decided to FORCE the government to get its fiscal house in order. They didn’t do so with guns. They didn’t do so with bombs. They did so by picking up the phone and uttering a four letter word: “Sell.”

That simple move set in motion a process that eventually drove interest rates sky-high. And that has now turned a simmering economic problem into a major political and social crisis.

So what’s the lesson?

Don’t Wait for Disaster to Strike — Head It Off While You Still Can!

If Greece had tried to get its house in order BEFORE interest rates surged, it probably would have avoided the disaster unfolding before our eyes. If Greek officials had demonstrated a little foresight — a little proactive thinking and policymaking —they could have prevented a huge tragedy.

Will the rest of the world take the Greek crisis seriously?
Will the rest of the world take the Greek crisis seriously?

But instead, they chose the easy way out. And now they’re paying a huge price.

What I hope — in my heart of hearts — is that policymakers in Lisbon … Madrid … London … and most importantly, Washington, are listening. I hope they’re all sitting in front of their televisions and watching the chaos in Greece. I hope they’re going to learn their lesson and take PROACTIVE action to get their own fiscal houses in order.

What I fear is that they won’t.

Heck, not a day goes by without some television anchor or government official saying something like: “Look at the 10-year Treasury Note yield. If investors were worried about our debts or our deficits, they wouldn’t be buying our bonds at these low rates.”

But you know what?

They were saying the same thing in Athens … right up until September 24, 2009.

Until next time,

Mike

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.


© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife